Academic

Dale Oesterle, Stephen Bainbridge, and now Larry Ribstein have all recently weighed in Jones v. Harris, the upcoming Supreme Court case that has drawn attention and increased press coverage in the past few days.

Oesterle suggests that the case ?will have ripples across the governance of companies countrywide.?  Ribstein concurs, predicting that the ?ramifications of this case potentially extend well beyond the Court?s holding, whichever way it goes.?  I agree with both and believe that this case will have profound consequences for a number of major corporate law issues, including fiduciary duties, executive compensation, and more.

Bainbridge dissents about any such ripple effect, however, citing a terrific article by Donald Langevoort in which Langevoort argues that we must be cautious in drawing comparisons between mutual funds and corporations.  What Bainbridge does not emphasize, however, is that Langevoort?s goal was to disabuse those who would sanguinely assume that the robust protections of corporate governance extend to far weaker and differently structured mutual funds.

But the fact that an analogy is inapt in one direction does not necessarily doom conclusions that operate in the other direction.  Even if one agrees that the benefits of corporate governance do not apply with equal vigor to mutual funds, one might very reasonably wonder whether problems that afflict mutual funds ? excessive managerial compensation, for instance ? similarly infest corporations.  So Langevoort?s arguments will not necessarily contain the ripples, waves, or other effects that might follow from a decision in this case.